As policymakers desperately search for ways to give the sputtering economy a jolt without deepening the nation's budget deficit, some economists say an answer lies with the more than $1 trillion in U.S. corporate profits that reside overseas.

Advocates of repatriating that money say it could finance hundreds of thousands of new jobs, research and development and other investment that could lift the economy from the doldrums.

"It would certainly be in the economy's interest to bring this money home," said Robert J. Shapiro, a former undersecretary of commerce in the Clinton administration and chairman of Sonecon, an economic advisory firm.

But instead of being viewed as part of the solution for the nation's economic woes, the profits of U.S. companies held offshore continue to mostly serve as a flashpoint over the politically charged - and some say disingenuous - question of whether the tax code rewards corporations for "exporting" U.S. jobs.

Under federal tax law, U.S.-based multinational corporations are allowed to defer paying U.S. corporate taxes on profits made overseas as long as the profits are invested outside the United States. It is an option corporations often take and a big reason many of them pay taxes far lower than the nominal 35 percent corporate tax rate.

The massive sums of money held by corporations overseas have prompted calls for a temporary tax reduction to encourage corporations to bring more of the money home.

Former Service Employees International Union president Andrew L. Stern, now a senior research fellow at Georgetown University, has proposed that the government temporarily reduce taxes on repatriated corporate earnings, then use the tax revenue to fund an infrastructure bank. The proposal, he said, could generate at least 2.4 million jobs.

Congress enacted a tax holiday for corporate profits held overseas in 2004, lowering the rate for returned money to 5.25 percent. The measure raised the amount of repatriated foreign profits five-fold to nearly $300 billion. But rather than supporting job creation, a study found, much of the money went directly to shareholders - through increased dividends or expanded share buybacks.

Money for jobs

Still, some advocates think the idea is worth another try. "It was probably a success on its own terms," Shapiro said of the 2004 effort. "There are things we can do" to ensure that a tax holiday creates more jobs.

The amount of money U.S. firms make and keep offshore has led to repeated attempts by Obama and his allies in Congress to change how tax law treats multinationals. They say the tax code gives a competitive edge to companies that invest and create jobs overseas, as opposed to keeping them at home.

Next week, Senate Democrats plan to push a bill including a provision that would repeal tax deferral for firms that move operations from the United States to other countries and then import their products back home.

"Our tax policy should benefit working Americans, not stab them in the back," said Sen. Sherrod Brown (D-Ohio). Democrats estimate the bill's price tag at $720 million over 10 years.